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FAR and DFARS › FAR Part 17: Special Contracting Methods › Subpart 17.2

FAR 17.204 Contracts.

The codified text (eCFR, as of 2026-10-02). Under the Revolutionary FAR Overhaul ↗, agencies follow class deviations with new text for many parts while the formal rules go through the Federal Register: check the solicitation and your contract's clauses, which rule.

In plain English

This section explains how option contracts must be structured. It requires the contract to state limits on additional purchases or the overall term, and to say when the option can be exercised. It also caps most service and supply option periods at 5 years unless agency procedures approve otherwise, with an exception for information technology contracts.

Applies to: Contracts that include options for additional supplies, services, or contract term extensions

What it requires

  • Specify limits on the purchase of additional supplies or services, or the overall duration of the contract term, including any extension
  • State the period within which the option may be exercised
  • Set the option exercise period so the contractor has adequate lead time to ensure continuous production
  • Unless otherwise approved under agency procedures, keep the total of basic and option periods to no more than 5 years for services, and the total of basic and option quantities to no more than the requirement for 5 years for supplies

Key terms: option · basic and option periods · basic and option quantities · information technology contracts · Service Contract Labor Standards statute

Written by AI from this section's text. A guide, not legal advice: the text below rules.

The text

(a) The contract shall specify limits on the purchase of additional supplies or services, or the overall duration of the term of the contract, including any extension.

(b) The contract shall state the period within which the option may be exercised.

(c) The period shall be set so as to provide the contractor adequate lead time to ensure continuous production.

(d) The period may extend beyond the contract completion date for service contracts. This is necessary for situations when exercise of the option would result in the obligation of funds that are not available in the fiscal year in which the contract would otherwise be completed.

(e) Unless otherwise approved in accordance with agency procedures, the total of the basic and option periods shall not exceed 5 years in the case of services, and the total of the basic and option quantities shall not exceed the requirement for 5 years in the case of supplies. These limitations do not apply to information technology contracts. However, statutes applicable to various classes of contracts, for example, the Service Contract Labor Standards statute (see 22.1002-1), may place additional restrictions on the length of contracts.

(f) Contracts may express options for increased quantities of supplies or services in terms of (1) percentage of specific line items, (2) increase in specific line items, or (3) additional numbered line items identified as the option.

(g) Contracts may express extensions of the term of the contract as an amended completion date or as additional time for performance; e.g., days, weeks, or months.

Sections it refers to

Sections that refer to it

← 17.203 Solicitations. · 17.205 Documentation. →

Rule changes for FAR Part 17

Source: eCFR, 48 CFR chapters 1 and 2 (GPO GovInfo bulk data) ↗. Plain words for the terms: glossary.

FAR 17.204 Contracts · SpendQuery